Would Justin Welby be embarrassed to own shares in my bank?

The financial sector as a whole isn't the most salubrious industry to be in.

Last month, I took out a loan that had an effective APR of 243,333 per cent. But I didn't go to a payday lender to do it. Although the worst of them do offer loans with interest rates in the hundred thousands, a more typical cost of a payday loan is something like Wonga, which cites a representative APR of 5,853 per cent on its website.

No, instead, I took out an authorised overdraft at my bank. I didn't mean to, you understand; a Kickstarter project I'd backed finished, and charged me about £15. The email was caught by a spam filter, and I'd forgotten it was coming, so my mental accounting was thrown out of whack. By the time I found out, I'd been overdrawn by 17p for two days. For that privilege, my bank charged me the princely sum of £2.

Just for comparison, Wonga themselves, the arch-villain of the day, would have charged me a third of a penny, if they did loans that small, though their handling fee would have been much larger.

In my defence, I'm not an entirely ignorant consumer. The bank account I have does have punitively high interest rates if you go slightly overdrawn, but at the same time, it pays me money for being in credit (something you won't find all that frequently these days). When I'm not an idiot, the two balance out to leave me slightly better off.

But it does leave me wondering at how we pick which companies are evil. Justin Welby, the archbishop of Canterbury, today says he is "embarrassed" to discover that the Church has a financial stake in Wonga. On a scale of one to ten, his embarrassment ranks "about eight", apparently. But where would an investment in my bank rank? Or is a bank a respectable institution, above criticism, even when the numbers involved tell a different story?

Part of the answer is that the numbers involved don't, in fact, tell the whole story. Quoting the interest rate for my bank is misleading: a better way of phrasing it is to say "I am charged £1 for every day I have an authorised overdraft between £0 and £500". The only reason why my effective APR was so high is because the amount I "borrowed" was so low. But for payday lenders, there's also other ways to phrase it which are less misleading. Wonga, for instance, charges interest of one per cent for every day the loan is taken out, plus a flat handling fee.

But there's also a question of business practices. It's fair to say that advising students to take out a payday loan instead of a student loan, for instance, is not particularly ethical. But then, neither is systematically selling insurance to people who don't need it and will never be able to claim on it, or lying about how much lending costs you in order to boost your profits. It's the financial sector as a whole which could do with a healthy dose of ethics, it seems.

A sign outside a 'Speedy Cash' cash loans shop on Brixton High Street. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The UK is dangerously close to breaking apart - there's one way to fix it

We must rethink our whole constitutional settlement. 

When the then-Labour leader John Smith set up a report on social justice for what would be the incoming government in 1997, he said we must stop wasting our most precious resource – "the extraordinary skills and talents of ordinary people".

It is one of our party’s greatest tragedies that he never had the chance to see that vision put into practice. 

At the time, it was clear that while our values of equality, solidarity and tolerance endured, the solutions we needed were not the same as those when Labour was last in power in the 1970s, and neither were they to be found in the policies of opposition from the 1980s. 

The Commission on Social Justice described a UK transformed by three revolutions:

  • an economic revolution brought about by increasing globalisation, innovation and a changing labour market
  • a social revolution that had seen the role of women in society transformed, the traditional family model change, inequality ingrained and relationships between people in our communities strained
  • a political revolution that challenged the centralisation of power, demanded more individual control and accepted a different role for government in society.

Two decades on, these three revolutions could equally be applied to the UK, and Scotland, today. 

Our economy, society and our politics have been transformed even further, but there is absolutely no consensus – no agreement – about the direction our country should take. 

What that has led to, in my view, is a society more dangerously divided than at any point in our recent history. 

The public reject the status quo but there is no settled will about the direction we should take. 

And instead of grappling with the complex messages that people are sending us, and trying to find the solutions in the shades of grey, politicians of all parties are attached to solutions that are black or white, dividing us further. 

Anyone in Labour, or any party, who claims that we can sit on the margins and wait for politics to “settle down” will rightly be consigned to history. 

The future shape of the UK, how we govern ourselves and how our economy and society should develop, is now the single biggest political question we face. 

Politics driven by nationalism and identity, which were for so long mostly confined to Scotland, have now taken their place firmly in the mainstream of all UK politics. 

Continuing to pull our country in these directions risks breaking the United Kingdom once and for all. 

I believe we need to reaffirm our belief in the UK for the 21st century. 

Over time, political power has become concentrated in too few hands. Power and wealth hoarded in one corner of our United Kingdom has not worked for the vast majority of people. 

That is why the time has come for the rest of the UK to follow where Scotland led in the 1980s and 1990s and establish a People’s Constitutional Convention to re-establish the UK for a new age. 

The convention should bring together groups to deliberate on the future of our country and propose a way forward that strengthens the UK and establishes a new political settlement for the whole of our country. 

After more than 300 years, it is time for a new Act of Union to safeguard our family of nations for generations to come.

This would mean a radical reshaping of our country along federal lines where every component part of the United Kingdom – Scotland, Wales, Northern Ireland and the English regions – take more responsibility for what happens in their own communities, but where we still maintain the protection of being part of a greater whole as the UK. 

The United Kingdom provides the redistribution of wealth that defines our entire Labour movement, and it provides the protection for public finance in Scotland that comes from being part of something larger, something good, and something worth fighting for. 

Kezia Dugdale is the leader of the Scottish Labour party.